Axpo, a Swiss company, is looking at opportunities in Japan's power and LNG trading

Axpo, a Swiss power producer and trader, is looking at opportunities in Japan's electricity and liquefied gas (LNG), as the changes in Japan's power sector have created a demand for spot LNG and hedging.

Japan has set an ambitious target of renewables accounting for 36%-38% of its total electricity mix by 2030. In 2016, the power market was liberalised, leading to a more liquid futures exchange for electricity.

Marco Saalfrank is a member of Axpo’s management board. He said that Japan has nine different price zones.

He added, "This is a very interesting product to trade."

As in Europe, Japan is also expected to see a decline in gas demand as its share of renewables, nuclear and other power sources grows. This makes it difficult for utilities to commit long-term to LNG supply. Saalfrank said that buyers will want flexibility in diverting cargoes.

He said that Axpo could offer LNG structured products.

Axpo has 12 staff in Singapore who trade power, LNG, Gas and LPG (liquefied Petroleum Gas) with the city-state and Australia. Saalfrank added that Axpo was also interested in trading opportunities on New Zealand's electricity markets.

Saalfrank said that the colder weather in Europe is likely to cause more natural gas to be drawn out of storage than previous winters.

He said that due to the contract dispute between Gazprom Austrian Gas Importer OMV and Gazprom, central-eastern European countries would be affected most if Russian gas supplies were stopped.

"The West has a good supply of LNG and (if) Central Eastern Europe experiences a shortage of gas, there will be a price difference between Western Europe and Eastern Europe. This will encourage gas to flow towards the countries that will need it," said Saalfrank. He is also Axpo's head of continental Europe merchant trade. (Reporting and editing by Florence Tan, Emily Chow)

(source: Reuters)